Definition of Fidelity bond:
Type of insurance bought by an employer to protect against losses (such as embezzlement or theft by employees) that are not generally covered under normal theft or burglary policies. It may either be a blanket bond (applying to all employees) or for each employee on an individual basis. The insurance company may set certain guidelines to be followed in the insured firms hiring practices, and the protection continues only so long as the duties of the covered employees remain the same (unless arranged otherwise). Some businesses such as brokerages, cash carriers, and security firms are required by law to obtain fidelity bonds. Also called fidelity guaranty or fidelity insurance.
A fidelity bond is a form of business insurance that offers an employer protection against losses that are caused by its employees' fraudulent or dishonest actions. This form of insurance can protect against monetary or physical losses.
If a company has employees that commit fraudulent acts, the company itself may be exposed to legal or financial penalty in addition to the individual employee or employees who committed the act. As a result, companies are at risk of being exposed to such penalties, especially firms with a large number of employees. Fidelity bonds are insurance policies that cover firms for such damages.
How to use Fidelity bond in a sentence?
- The company needed a fidelity bond because some things were not covered under the typical policies and we could not afford any losses.
- In order to protect themselves against uncommon and unusual losses, the executives requested fidelity bond information from their insurance company.
- Fidelity bonds are insurance policies which protect policyholder companies from wrongful acts committed by employees.
- Fidelity bonds are not tradable securities.
- The fidelity bond was a wise decision made by the vice president as we would have been drastically affected by a negative event without it.
- This form of insurance is considered a component of a company's risk management strategy.
Meaning of Fidelity bond & Fidelity bond Definition